Heavier carcasses typically coincide with richer marbling and higher quality grades. But seasonal grade trends simply push quality lower this time of year as USDA’s grading report for the September 11 week shows an abrupt leg down in percent USDA Choice
Total carcass cutout prices have tended to increase during August in most recent years, but round cuts are holding the stronger price spike this season longer into September due to the substitution effect noted in this update.
In the waning days ahead of Labor Day spot market beef prices are posting positive numbers, boosting a bit of optimism into the total beef complex. Historically, the uptrend will subside following the holiday, and wholesale prices will seek an early fall low mid-October.
Early August in the beef market generally sees lackluster fed cattle prices and the final throes of the summer slump in boxed beef values. However, in the modern retail grocery business, it’s high time that end users make their plans for fourth-quarter holiday beef features.
With fed cattle carcass weights now set to steadily increase into at least October, carcass quality grades typically decline beginning in early August. Lighter placements and continued smaller slaughter totals will keep product supplies in check. Labor Day demand is just weeks away and with that uptick, the quality-based price spreads are likely to perform quite well.
From a cattlemen’s perspective and fed cattle management standpoint, I would look for continued wide quality grade premiums as well as Certified Angus Beef ® brand premiums on those packer grids. I would manage cattle and price cattle for our placements moving forward accordingly.
Now is the time for cattlemen to evaluate the potential for exceptionally strong premiums in high quality CAB traditional and Prime carcasses down the road. When high quality carcasses are in short supply the price spreads tend to explode. Be ready.
Two weeks ago fed steer prices reached a new record fueled by strong demand and restricted headcounts. But we knew there was a seasonal ceiling and it lasted only as quickly as one can say “seasonal trend.” Paul shares more insights in this CAB Insider.
The northern quality grade is only materially slipping as compared to the quality-rich years of 2020 and 2021. Exceptional quality premiums are not a theme in this record-high fed cattle market but above average cattle have never been a liability.
Most recent USDA quality grade data updates carcass grading trends through May 19. This is precisely the week on the calendar at which the percentage of carcasses meeting USDA Prime marbling levels have sharply decreased in each of the past three years.